No-action action: Why Mersinger wants the CFTC to stop wasting its time
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No-action action: Why Mersinger wants the CFTC to stop wasting its time

Regulators often rely on giving relief when market participants or products fall between different jurisdictions or certification is unavoidably delayed. But one US regulator is getting fed up with having to do the same thing over and over again, and is calling for rules to be fixed instead of being endlessly patched up.

Photo: CFTC

Summer Mersinger is losing her patience. As one of the commissioners of the Commodity Futures Trading Commission (CFTC), she has just watched commission staff issue another no-action letter to Korea Exchange (KRX) to allow it to continue to offer contracts based on the Korea Composite Stock Index 200 (Kospi 200) to qualified institutional buyers in the US.

The no-action letter, which was issued on Monday, takes effect on October 24 and lasts for one month, during which time the CFTC will continue its review and potential formal certification of the contracts, which are due to move again into the exclusive regulatory orbit of the CFTC.

Mersinger’s complaint is that such work is a waste of time and resources. It is less than a year since the CFTC had to issue an almost identical no-action letter to cover the possibility of a certification time-lag the previous time that the commission took responsibility for the products.

The problem stems partly from the way that regulatory responsibilities are parcelled out in the US. The CFTC is tasked with regulating contracts on indices deemed to be broad-based rather than narrow-based.

For narrow-based indices the regulation is shared between the CFTC and the Securities Exchange Commission (SEC), with a different certification process and a much more limited investor base.


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